Suppose that workers in A can produce 1 unit of S in 3 hours and 1 unit of T in 9 hours. Suppose that the relative price of S in B is 2. Graph the PPF for country A. Indicate the exact slope of the PPF. Show how the autarky equilibrium is determined
Illustrate a hypothetical international trade equilibrium, including production and consumption points, and trade volumes for a given (your assumption-be explicit) but permissible value of the international terms of trade.
The autarky price of S in A is 1/3, so that must be the slope of its PPF. A has comparative advantage in S, so once trade begins it must completely specialize in S. The international terms of trade must lie between 1/3 and 2.
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A) Costa Rica B) They have equal productive abilities. C) Guatemala D) neither country
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Indicate whether the statement is true or false
Many unions attempt to raise the hourly wages received by their members by restricting the supply of workers firms can hire from. Assuming the demand for workers who belong to these unions is inelastic, this would cause:
A) wages of individual union members to decrease and the total (combined) income of union members to increase. B) wages of individual union members and the total (combined) income of union members to decrease. C) wages of individual union members to increase and the total (combined) income of union members to decrease. D) wages of individual union members and the total (combined) income of union members to increase.
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A) to the left of the endowment point. B) to the right of the endowment point. C) on the endowment point. D) dependent on other factors.